Methanex Corp. was upgraded to outperformer from neutral by Jacob Bout at CIBC World Markets, after chief executive John Floren impressed him with a focus on shareholder returns and return on invested capital.

The analyst sat down recently with Floren, who also highlighted tightness in methanol markets, despite the recent pullback in oil prices.

Bout raised his EBITDA estimates for Methanex, and boosted his target multiple on the stock to 9x from 8x, based on the assumption that the company will complete its five per cent share repurchase in 2017.

The analyst also sees a higher likelihood that Methanex hikes its dividend and goes ahead with more buyback programs, perhaps before 2017 is complete.

He raised his target price on the stock to $56 from $45, pointed to improving supply-demand fundamentals in the methanol market.

“With the exception of the OCI Partners plant, and some additional capacity from Iran and China, there are no significant capacity additions expected in the short term,” Bout told clients, adding that more than half of the new Chinese capacity this year will come from a unit that consumes it internally.